With over 27 million copies sold Rich Dad Poor Dad: What the Rich Teach Their Kids About Money-That the Poor and the Middle Class Do Not! by Sharon Lechter and Robert Kiyosaki is one of the best selling books of the past decade. The book teaches principles of financial education through a story. The story focuses on a boy that has a “rich dad” – an entrepreneur that works hard but for himself. And the “poor dad” an employee working for the government.
Financial education is not taught well in most school systems as ultimately curriculum is written by employees working within “the system”. Sharon discusses this and and why she felt the need to write the book in the interview below.
In case you can’t see the interview above, visit: http://www.youtube.com/watch?v=KoBsCjKtGjQ
Rich Dad Poor Dad teaches about the four financial quadrants of the “employee“, “self employed“, “investor” and “business owner“. The book emphasizes that to create wealth we need to move to the “investor” or “business owner” quadrants. As both of these are not involved in the day to day running of the companies – the businesses can run without them. Employees work hard to help the investors and business owners create wealth for themselves.
Most doctors/lawyers etc become “self employed” as in if they ever don’t turn up to work, they won’t get paid. Getting out of the “employee” or “self employed” quadrant is not easy – but in the longer term worth it (especially for those that value freedom high on their list).
A useful definition they talk about in the book is that of “wealth“. The book defines it as how many days you could survive if you stopped working. If you have a million dollars in the bank, but spend $100,000 a month than your wealth is only 10 months worth. The day you have a lower burn rate than your passive income coming from investments is the day that you are out of the camel race (I’ve taken the liberty of localizing “rat race” for my middle eastern readers).
Sharon is as she preaches in her books also a smart business lady. Getting 27 million books sold. Turning “Rich Dad” into a brand selling 14 more books in the series – rather than simply resting after the success of a single book. “Rich Dad Cashflow” games and a whole bunch of other merchandise as well as franchising opportunities exist. Robert and Sharon practised what they preached and monetized their ideas. After a decade of growing the business Sharon sold her stake in Rich Dad companies in 2007.
Her latest book is Three Feet from Gold: Turn Your Obstacles into Opportunities! (Think and Grow Rich) written with Greg S. Reid and forward by Mark Victor Hansen. This takes one of the “god father” of personal development books – Napoloean Hill’s “Think and Grow Rich” written in 1937 and updates it with modern tales of entrepreneurs that stuck with it despite the odds.
Many of us take FedEx or innovations like Velcro for granted forgetting what these entrepreneurs went through in order to make their ideas a reality. Entrepreneurship is often glorified. But it’s also tough.
You have to go through a few valleys before you will reach your peaks. But it’s also rewarding to know that you control your destiny.
If you are interested in entrepreneuship than I highly recommend reading both these books. Because the fact is that entrepreneurship can be a lonely journey with many struggles – and reading from writers such as Sharon Lechter makes it feel like you are not the only one on the road.
Sharon Lechter sits on the advisory board for financial literacy for both President Bush and now Obama to help spread and advice about financial literacy. She founded Pay Your Family First and can be found at www.slecther.com.